Thomas Sargent and Christopher Sims are the newest and final 2011 Nobel Prize laureates for their work in studying the “cause and effect” of macroeconomic events. Sargent is a professor at New York University in Manhattan, while Sims teaches at Princeton University in New Jersey. Both men are 68 years old. By J BROOKS SPECTOR.
According to citation for their separate but closely related research they carried out in the 1970s and 80s, “Thomas Sargent has shown how structural macroeconometrics can be used to analyse permanent changes in economic policy… to study macroeconomic relationships when households and firms adjust their expectations concurrently with economic developments”.
Meanwhile, Christopher Sims “developed a method based on so-called vector autoregression to analyse how the economy is affected by temporary changes in economic policy and other factors.” The announcement added that “the methods developed by Sargent and Sims are essential tools in macroeconomic analysis.”
Economic commentators have noted the particular relevance of the two men’s work, now, saying their research has become especially relevant to our current circumstances as US and European economic managers struggle with the invidious policy choices that come with having to deal with high levels of national debt, even as they try to boost their lagging economies.
When the awards were announced, Sims told a Stockholm press conference by phone that he had been asleep when the prize committee called. “Actually, at first we were called twice and my wife couldn’t find the talk button on the phone so we went back to sleep.” Sims added that their work was no magic bullet to solve the global financial turmoil. “I don’t have any simple answer, but I think the methods that I have used and Tom has developed are central to finding our way out of this mess. I think they point a way to try to unravel why our serious problems develop and new research using these methods may help us lead us out of it.” Given the current mess, maybe we should be happy with that much! Sims added that as far as investing his half of the prize, he said he would keep it in cash and think on it for a while before doing anything else. Smart man, that. Maybe we should listen to him?
Meanwhile Sargent’s wife told the media that when he was called about winning the prize, he just went about his usual routine to get ready to take the train from New York City to Princeton, New Jersey, where he teaches this semester.
Purists, of course, may still insist that this economics prize is not a pure Nobel award, but, given the fact that Alfred Nobel made his fortune as a businessman (well, okay, selling high tech explosives), it does seem fitting that the Swedish Central Bank endowed this newest prize in honour of Nobel’s larger scientific and social legacy with his prizes in chemistry, physics, medicine, literature and peace. The economics prize is officially known as the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel and was first given in 1968. DM
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